SHANGHAI: China stocks retreated on Tuesday, snapping their week-long winning streak, after data showed country's factory-gate prices had shrunk at the sharpest pace in three years in August, reinforcing the urgency for Beijing to step up stimulus.
The CSI300 index was down 0.6% at 3,950.30 points at the end of the morning session, while the Shanghai Composite Index slipped 0.4% to 3,013.71 points.
Analysts say flagging demand at home and abroad is forcing some Chinese businesses to slash prices to win new orders or cut output to contain costs, chipping away at already-lean profits and further dampening business confidence.
US Treasury Secretary Steven Mnuchin on Monday said he did not see the threat of a recession as the Trump administration seeks to revive trade negotiations with China, adding that he expected a positive year ahead for the US economy.
China stocks were less sensitive to the changes in the Sino-U.S. trade situation after ups and downs in the past, while market participants might only embrace limited optimism for the results of their October negotiations, analysts at AVIC Securities said in report.
Besides investors could incline to book profits following a recent strong rally, even as the benchmark Shanghai index reached the key 3,000-point level, seen as a strong resistance since May when markets tumbled after Trump threatened fresh tariffs.
In Hong Kong, the Hang Seng index added 0.1% to 26,703.58 points, while the Hong Kong China Enterprises Index was unchanged at 10,413.89 points.
An escalation of violence cannot solve social issues in Hong Kong, the leader of the Chinese-ruled city, Carrie Lam, said on Tuesday, adding that she deeply regretted interference by foreign parliaments in the Asian financial hub's matters.
Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.29% while Japan's Nikkei index was up 0.26%.
The yuan was quoted at 7.1162 per U.S. dollar, 0.07% firmer than the previous close of 7.121.
The largest percentage gainers in the main Shanghai Composite index were Harbin High-Tech Group Co Ltd, which gained 10.02%, followed by Kingfa Sci & Tech Co Ltd, gaining 10.01% and Super Telecom Co Ltd, up by 10.01%.
The largest percentage losses in the Shanghai index were China National Software & Service Co Ltd, which dropped 8.41%, followed by Guangdong Ellington Electronics Technology Co Ltd, losing 5.66% and Hefei Metalforming Intelligent Manufacturing Co Ltd, down by 5.22%.
So far this year, the Shanghai stock index gained 21.29%, while China's H-share index rose 2.9%. Shanghai stocks have risen 4.8% so far this month.
The top gainers among H-shares were China Telecom Corp Ltd, up 3.62%, followed by CITIC Ltd, gaining 2.99% and China Petroleum & Chemical Corp, up by 2.78%.
The three biggest H-shares percentage decliners were ANTA Sports Products Ltd, which has fallen 2.38%, ENN Energy Holdings Ltd, which has lost 2.3% and China Merchants Bank Co Ltd, down by 2.0%.
As of 04:15 GMT, China's A-shares were trading at a premium of 29.67% over the Hong Kong-listed H-shares. - Reuters
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